UK's inflation rate remains above that of major European economies
UK inflation showed minimal change in August, according to the Office for National Statistics (ONS). The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.1% in the 12 months to August 2025, slightly lower than the 4.2% recorded in July. On a monthly basis, CPIH rose by 0.3%, down from a 0.4% increase a year earlier.
The Consumer Prices Index (CPI), which excludes housing costs, stood at 3.8% in the year to August, unchanged from July. Monthly growth was also 0.3%, matching the rate of August 2024.
Transport costs ease
The small decline in CPIH was largely driven by transport, particularly air fares. Prices for passenger flights rose by just 2.1% between July and August, compared with a 22.2% surge over the same period in 2024. The ONS noted that the timing of school holidays likely contributed to this shift.
Overall transport inflation slowed to 2.4% in the 12 months to August, down from 3.2% in July. Vehicle maintenance and repair costs also fell, though this was partially offset by higher fuel prices. Petrol and diesel rose modestly between July and August, but both remained cheaper than a year earlier, with petrol averaging 134.2p per litre compared with 142.3p in August 2024.
Housing and household services
Housing and household services inflation slowed to 6.0% in August from 6.2% in July. Owner occupiers’ housing costs, which make up a significant part of the CPIH, rose by 5.3% over the year, the lowest annual rate since December 2023.
Despite the slowdown, housing and household services continued to make the single largest contribution to overall CPIH, adding 1.79 percentage points to the headline rate.
Rising food prices
In contrast, food and non-alcoholic beverages saw inflation accelerate. Prices were 5.1% higher than a year ago, up from 4.9% in July. The increase was the fifth in a row and the highest since January 2024, with notable rises in cheese, fish, and vegetables.
International comparisons
The UK’s inflation rate remained above that of major European economies. Flash estimates showed France at 0.8% and Germany at 2.1% in August, placing the UK among the highest in Western Europe.
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